|Argo Investments - Investment Philosophy|
|Higher Dividend Income Lifts Argo Payout|
About this Fund
|FUND MANAGER||Argo Investments|
|ASSET CLASS||LISTED INVESTMENT COMPANY|
|INVESTMENT STYLE||ARG invests in a diversified Australian equities portfolio which is actively managed in a low cost structure in a tax-aware manner.|
|INVESTMENT PROFILE||ARG aims to maximise long-term returns to shareholders through a balance of capital and dividend growth.|
|BENCHMARK||S&P ASX 200 Accumulation Index|
|FUND SIZE||S&P ASX 200 Accumulation Index|
|NO. OF HOLDINGS||Around 100|
Benefits of investing in ARG
Diversification with administrative ease
Argo shares offer exposure to a portfolio of around 100 Australian companies and trusts via a single shareholding. This allows Argo shareholders to achieve diversification across the share market without the need to maintain and monitor a portfolio of different holdings. In addition, the administrative burden is eased, as you only receive dividends and correspondence from one company.
Low management costs and no fees charged to shareholders
Argo is internally managed and shareholders are not charged fees. The costs of managing the portfolio and administering the Company are borne internally and in the last financial year equated to 0.15% of average assets under management, a figure well below most other actively managed investment products.
Opportunities for additional investment without paying brokerage
Once you become an Argo shareholder, and if you have a registered address in Australia or New Zealand, you can elect to participate in the Dividend Reinvestment Plan (DRP) or the Share Purchase Plan (SPP) when offered by the Directors. These plans allow you to increase your Argo holding by dealing directly with the Company, rather than through the share market, thereby saving brokerage charges. Participation in the DRP allows automatic reinvestment of your dividends into additional Argo shares, often at a discount to the market price. The SPP, which in recent times has been offered once a year, allows additional investment of up to $15,000 per annum. Details of any SPP offer are posted to eligible shareholders at the time of the offer together with an application form.
Long-term share price and dividend growth
Argo's business objective is to maximise returns to shareholders through a balance of capital and dividend growth from a diversified Australian investment portfolio.
The investment team constantly monitors the daily noise in the share market and economy to take advantage of short-term market volatility in order to buy or add to existing holdings at attractive prices, which will help to grow the portfolio in the long run and provide share price appreciation and growing dividend income into the future.
A $10,000 investment in Argo shares on 1 July 2003 would have grown to a value of $31,702 at 30 June 2018, assuming the dividends paid are reinvested.
Tax-effective dividend income
Argo pays dividends to its shareholders out of the profit it makes from harvesting' the dividends and distributions received from the companies and trusts held in its investment portfolio. Argo has paid dividends every year since its inception in 1946, with the quantum of dividends influenced by fluctuations in the dividends and distributions generated by the portfolio. Since 1995, Argo's dividends have all been fully franked. The extent of franking depends on the tax credits available to the Company.
In addition, some dividends include a Listed Investment Company (LIC) capital gain component, allowing certain shareholders to claim a tax deduction for a portion of the attributable part of the LIC capital gain component of the dividend. Details are provided on the dividend statement when applicable.
Closed-end listed fund structure
Some unlisted managed funds are forced to sell portfolio stocks when investors wish to redeem their units. As a listed investment company, Argo's portfolio is separated from the activity of buyers and sellers of Argo shares as they trade with one another on the share market. This closed-end structure is ideally suited to building a long-term portfolio because Argo is not forced to sell desirable stocks in order to satisfy fund outflows.
If you wish to sell some or all of your investment in Argo, you simply sell the desired number of shares on the Australian Securities Exchange. Argo does not charge exit fees and your only costs will be brokerage charges payable to your share broker. As with other sales of shares, the proceeds will be available 2 business days later. (changed to T + 2 from 7 March 2016).
Transparency and corporate governance
As a public company, Argo's operations are overseen by the Board of Directors on behalf of all shareholders. The Directors, other than the Managing Director, are elected by shareholders and are subject to re-election at the Annual General Meeting at least once every three years.
As a listed company, Argo regularly discloses up to date information to the public via Australian Securities Exchange announcements including: monthly net tangible asset backing (NTA) per share, twice-yearly financial results and a comprehensive Annual Report.
Many of Argo's shareholders are self-managed superannuation funds or passive investors who seek a broad exposure to the Australian sharemarket without the need for constant monitoring of a portfolio, often investing for the long-term on behalf of children or grandchildren.
About the Fund
Argo Investments Limited (ARG) is an Australian listed investment company. Argo's objective is to maximise long-term returns to shareholders through a balance of capital and dividend growth. It does this by investing in a diversified Australian equities portfolio which is actively managed in a low cost structure in a tax-aware manner.
Argo shares offer investors a professionally managed, diversified and easily traded exposure to the Australian equity market, without the need to pay fees to an investment manager.
Argo is a long-term investor in Australian equities and has been steadily building a large, diversified portfolio since 1946. We are strong believers in the cumulative effect of investing in quality companies for the long-term and we avoid the temptation to seek short-term gains in high-risk situations.
How we invest your money
The investment team, led by the Managing Director, is responsible for constructing and maintaining an appropriately diversified portfolio which generates both long-term capital growth and dividend income.
The closed-end structure of a listed investment company is ideally suited to building a long-term portfolio, as Argo does not experience investor redemptions which might otherwise force desirable long-term holdings to be sold. Instead, shareholders wishing to liquidate their holding in Argo simply sell their shares on the share market. This stability allows Argo to take advantage of short-term market fluctuations in order to buy or add to long-term holdings when prices trade below the long-term valuations calculated by the investment team. The selling of investments is relatively rare and generally only occurs due to takeovers or when it is perceived that the long-term value of an investment is compromised by deteriorating industry conditions or other concerns.
Our investment objective is to maximise long-term returns to shareholders through a balance of capital and dividend growth. In order to achieve this, a diversified portfolio of around 100 holdings has been constructed. The portfolio is deliberately conservative, with the 20 largest 'blue chip' holdings making up more than 60% of the value of the portfolio and providing over 60% of the dividend income. Smaller companies are also held, where we see potential for long-term growth and increasing dividends.
The investment process, which involves the monitoring and review of existing investments as well as analysing potential new investments, includes extensive research, company visits and industry studies, as well as economic analysis to help identify emerging trends and assist with the timing of transactions.
Argo uses sophisticated software to help collate and analyse the vast amounts of information and daily 'noise' generated by the share market, including forecasts and recommendations by brokers, company earnings guidance and other announcements and news events. This enables consensus estimates to be generated for comparison with our own forecasts and valuations.
Once an appealing potential investment is identified, all aspects of its operations, strategy, management and the relevant industry dynamics are rigorously investigated and analysed. The designated analyst prepares an internal report and recommendation which is subjected to peer review and debate.
The final consideration in making an investment decision is portfolio construction. This takes into account Argo's desire for appropriate diversification across sectors and industries to reduce risk, and the need to generate long-term capital growth and an ongoing dividend income stream which also grows over time.